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Lesson Plan:Health InsuranceSubmitted by Marcia Allen, Murphysboro High School, Murphysboro, Illinois. Ms. Allen is a 2002 graduate of theInsurance Education Foundation (IEF), Insurance Education Institute at Illinois State University, Normal, Illinois.For more information on the Insurance Education Foundation, access the following Web Site: http://www.ief.org/Subject:Consumer EconomicsGrade Level:11 - 12Length:One Class PeriodObjective:Students will be able to apply their knowledge of health insurance definitions by takingscenarios and determining the cost to the consumer and the cost to the insurancecompany.Materials:Student - pen or pencil, page of scenarios and worksheetsTeacher - copies of scenarios, transparency and overhead projectorBackground:Students will have completed health insurance vocabulary assignments found in mosttextbooks.Activities:The teacher will present an example of how deductibles, co-insurance, stop loss points,limits of policy, and exclusions are applied in a health insurance problem.Show-Me Standards: For more information access the MO Department of Elementary and SecondaryEducation website at: http://www.dese.mo.gov/standardsKnowledge Standards:Communication Arts (1, 2, 6)Health/Phys Ed. (6)Mathematics (1, 3)Science (8)Social Studies (4)Performance Standards:1-5, 1-8, 1-10, 2-3, 2-7, 3-1, 3-2, 3-4, 3-5,3-6, 3-7, 3-8, 4-1, 4-5, 4-6

Don’t1 23 3 4RISKIT StepStep 1:yourselfbasics2: LearnCovertheYourself“Sick” InsuranceSure, mom and dad’s policy covers you now, butsoon you’re going to have to make some choices.After you head out on your own, who will coveryou when you’re sick? Most people will find healthcoverage through their employer. Some peopleown their own business and are not offered healthinsurance, or want an individual policy. Here issome information to use when shopping forinsurance.If you’re headed out on your own Most family policies will cover a dependent (you)while you’re in the house and under the age of19. Once you are out on your own, the first thingyou need to know is whether or not your employeroffers health insurance. If not, you should startlooking for an individual policy. Dont wait untilthat first ER trip gets you 10,000 in debt.If you’re headed to the military The military often will send you to the infirmarywhen you’re sick. They may also cover you whenyou’re off base. Most individual policies will notcover someone while they are on military duty. Ifyou are looking into a separate policy, rememberto read the exclusions.If you’re headed to college Check your parents’ policy. If you are listed as adependent on your parents’ tax return andmaintain a full-time student status, you couldprobably stay on their policy. If the college isoffering a student health policy, read the policyvery carefully. Some policies cover you adequately,but some may be lacking coverage important toyou.Types of Coveragemajor medical policies: generally have adeductible and a co-insurance with a lifetimemaximum limit. (This is usually 1M or more)3These policies cover medically necessary doctorvisits and hospitalizations along with physicaltherapy, outpatient surgery, etc. This type of policycan be offered with or without a PPO networkprovision. This offer would be up to the insurancecompany.HMO policies: Health Maintenance Organizationsoffer coverage similar to that of a major medicalpolicy. These policies have co-payment obligationsfor you for the various covered benefits. This is amanaged care plan where you choose your primarycare physician (PCP) from a list of networkproviders. Your PCP is typically responsible forthe management of most aspects relating to yourhealthcare. HMOs require that an in-networkdoctor provide care in order to have your claimpaid by the HMO. (There are exceptions foremergency room care) Be sure to read the policyrelated to emergency room care coverage. ManyHMOs require referrals and pre-authorizations forany care other than a PCP visit. Be sure youunderstand your contract and your obligations forgetting referrals and pre-certifications before youreceive treatment. These policies will also haveexclusions and non-covered services in the sameway as a major medical policy. Make sure youunderstand the limitations on your policy.PPO policies: Preferred Provider Organizationsprovide consumers with economic incentives ifthey contract to patronize a particular group ofhealthcare providers. There are many types andstyles of PPOs. One common style of PPO maypay 80/20 if you go to a doctor that is in thenetwork of providers. The PPO will pay for 80%of your bill; you pay 20% after any applicabledeductibles. If you go out of the network, theamount a PPO pays will change (usually less).hospital/surgical policies: offer a schedule ofbenefits for specific services. These policies listthe medical service and the maximum the policywill pay for each service. For example the schedulewill list various types of surgery with a limit. Theremay be limits on the payment toward surgeon fees,daily hospital room fees, etc, regardless of theactual cost of the service. These policies also

indemnity policies: offer a fixed amount ofpayment for the type of service or disease or injury.Hospital indemnity and specified disease (Cancergenerally) policies pay limited amounts. The policywill chart out when coverage is applicable andwhat the specific amount is that they will pay.Policy Termsusual & customary charges: the company has astandard rate for a procedure or visit. If the doctorcharges above that amount, they exceed thecompany’s “usual and customary amount”.co-insurance: the amount you pay to the doctoror provider at the time of service. The doctordirectly collects this amount of your shared costof insurance. Co-pays are listed as percentages.For example a 70/30 plan means the company pays70% and your shared cost is 30%.deductible: the specific amount of claims you willpay before the company pays. The higher yourdeductible, the lower your premium can be.co-pay: a certain amount that you pay for medicalcosts. For example, you pay 5 every time youhave a prescription filled.pre-existing conditions: a condition that occursbefore you get health coverage. Companies canand do exclude coverage for pre-existingconditions. Once you get sick or are diagnosedwith a health condition, it is usually too late toget coverage. If you do find coverage, the pricewill be higher or the options will be lower.ADVICE: GET HEALTH COVERAGE WHILE YOU AREHEALTHY!waivers and exclusions: some companies developpolicies with certian exclusions in mind. A policyexclusion is a statement that the company willnot pay for certain types of accidents orsicknesses. A aaiver becomes part of the policyafter you sign it. A waiver usually is put togetherfor the company to exclude a specific illness youmay have or a previous injury. Most waivers arepermanent. Waivers may come off of a policy onlywhen you and the company agree to take themoff. If you sign a waiver, most of the time theonly way to get coverage is to go buy a new policy.grievance: HMO and PPO plans are required toprovide a way for you to appeal coverage orbenefit decisions you believe are wrong. If youthink your claim is incorrectly denied or you arebeing treated unfairly, state law requires plans toadminister a process to resolve those disputes.This gives you a quick and inexpensive way toresolve a grievance, but you still have the right tosue the plan if necessary.pre-certification: some plans require that you precertify a healthcare service or procedure. If thepolicy states that prior approval by the companyis needed, you may be stuck with the bill if youdo not get a pre-certification.Simple Lesson1. Bob’s PPO states that his co-insurance is 80/20.Bob’s bill just came in at 200.00. The PPO pays and Bob pays the doctor ?2. Heather signed a waiver that says her pre-existingcondition for bad hair coloring will not be covered.She signed up for an indemnity plan that pays forbasic accidents and sicknesses. If Heather had abad hair coloring accident would the insurancecompany be required to pay? How long does herwaiver last?3. You feel that your claim was mishandled ordenied. What is the first and least expensive stepto help you resolve your dispute?A.B.C.D.File a GrievanceCall MDIContact a LawyerPitch a fit in the lobby of the insurancecompany.Answers:1. 160 & 40 2. Heather has signed a waiver, which does not comeoff until the company agrees or she gets other insurance 3. MDIrecommends you start with “A”, but is able to assist if needed. “D”is really not recommended.have exclusions and exceptions, so read thecontract carefully.P.O. Box 690Jefferson City, MO 651021-800-726-7390http://insurance.mo.gov

Scenario:Nathan has the following healthinsurance policy: 250 deductible 80/20 co-insurance 2,000 stop loss limit (amountto which insurance is applied) 1,000,000 limit of policyNathan had a skate boarding accidentand the bill was 40,250. How much did Jim pay? How much did the insurancecompany pay?

Break it down: 40,250 Cost of Accident250 Deductible 40,0002,000 Stop Loss Point 38,000x 2,000 Stop Loss Point0.20 Nathan's % 400x 2,000 Stop Loss Point0.80 Insurance Co.'s % 1,600NathanPaysInsuranceCo. Pays 250Deductible 0 400Co-Insurance 1,600 0 Stop Loss point met 38,000 650Total 39,600